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Property taxes on the rise
The tax increase reflects an increase in real estate values in Crook County
Brian Huber, who was recently appointed as the new Crook County Assessor, is reporting that property values have been increasing locally.
February 18, 2013
For the first time in several years, property values in Crook County are on the rise, according to County Assessor Brian Huber.
“We’ve done a very preliminary assessment of what values are going to do for the coming year,” Huber said, “and it looks like they’re definitely not going to drop, and they may go up — at this time we’re estimating two or three percent.”
That’s good news for a county that has struggled with significant drops in revenue, and is in stark contrast to the past three or four years, Huber said, when real market values in Crook County declined by 20 or 30 percent. Even as recently as last June, Prineville’s city manager, Steve Forrester, said the city budget for 2012-2013 included a forecast for tax revenues to be down “about four percent,” according to a story in the Central Oregonian.
Reasons for the turnaround vary. One is the diminished number of foreclosures, according to Huber.
“There’s just not many of them out there on the market,” he said, “so it’s not an option anymore. They (buyers) have to go with the traditional sellers. So that’s driving up the prices.”
Local realtor and president of the Central Oregon Association of Realtors, Michael Warren II, shared a similar perspective.
“The distressed properties have slowed down,” he said. “They’re still on the market but they’ve slowed down. Short sales and bank-owns have been priced where they need to be. The market’s kind of getting stabilized. That helps, plus inventory’s really low.”
In addition, all of the lower-value properties are gone, and so people need to pay more to get the quality they want, Warren said. Add to that, an abundance of first-home buyers, people who lost their homes who are beginning to re-qualify for loans, and an influx of retirees, and you have the perfect formula for rising real estate prices.
“All those things combined help to bring it to a steady level,” he said. “It’s creeping up enough to help the market yet it’s still affordable.”
Statewide, it’s a situation peculiar to Central Oregon and Jackson County, said Erik Schmidt, spokesman with the Oregon Association of Counties.
“Jackson County hasn’t really seen the kind of increase Deschutes County saw (Deschutes County recorded a 13.8 percent increase in home prices, according to a Corelogic report published by KTVZ.com), but from what I’ve been able to see and read, it appears that Central Oregon is recovering more quickly from the property drop of the Great Recession.”
“Deschutes County’s in its own world,” quipped Jefferson County Assessor Jean McCloskey, who compared her county to Crook.
“We are very similar to Crook County in the decline in market values,” she said. “We’re seeing a few areas in Jefferson County where values are starting to slightly increase. We think we’ve bottomed out.”
An increase in property values is good news for Crook County government, but bad news for property owners, especially for those who are used to seeing decreasing tax assessments. However, it’s more complicated than a simple change in a property’s value, said Huber, and it all relates to Measure 50, passed by the voters in 1997.
Measure 50 was an attempt to stabilize property values and hence, taxes. Beginning with the 1997-1998 property tax year, the taxable value (TV) of every property was established at 90 percent of its assessed value for 1995-1996. Stability would be realized by an automatic annual three percent increase in TV – no more, no less.
The real market value (RMV) of a property – its value on the open market – rarely matches its taxable value, but plays into the tax assessment nonetheless. Taxes on a given property are always based on the lesser of the two.
If the RMV is above the TV, the property will be taxed on the basis of the TV, and will increase a steady three percent annually. However, if a property’s RMV is below its TV, taxes are assessed against the lower value and are subject to whims of the market. They could go up – they could go down. This leads to some interesting scenarios.
Consider two properties, said Huber. One has a RMV of $100,000 and a TV of $125,000. Taxed at the RMV (since it’s lower), if the RMV increases 10 percent – to $110,000 – the taxes will rise accordingly.
“You could have somebody right next to them in the opposite situation,” he said, “where their RMV is $100,000 but their TV is only $90,000. They’ll only pay the three percent increase next year.”
A particularly vexing situation exists for many of those whose assessed value is based on the TV. Their taxes have risen each of the last several years in spite of a decrease in RMV.
“The problem we’re going to see in the coming years,” Huber explained, “is once the RMV drops below their TV – their Measure 50 value – it can go up more than three percent, and their taxes can go up more than three percent. Their taxable value is not going up more than three percent, but what they see in their tax rate is more than three percent. And people, I think, don’t quite understand that.”
Ninety percent of the properties in town, he said, have a RMV below their TV, and so as the economy improves, the RMV will rise proportionately. Homeowners used to decreasing property taxes could be in for sticker shock when they see their next bill.
“There’s definitely going to be some people who see more than a three percent increase in their taxes,” warned Huber.
Huber is concerned that Crook County residents may not fully understand the situation, and so he plans to host two or three town hall meetings closer to November, when the new tax bills are sent out, to explain the situation.
“We’re definitely going to do something,” he said.
Schmidt acknowledged the problem as well.
“If you look at it in the long run, yeah, that’s (increasing property values) a good thing,” he said. “But it’s hard on people who’ve gotten used to paying a lower property tax rate, and I can certainly understand the hardships that that’s going to create for folks who are on fixed incomes or have seen their real aggregate income drop.”
Forty-four-year-old Brian Huber has less than two months’ experience as Crook County’s assessor, but he’s far from inexperienced. As the County’s chief appraiser since 2002, he was a logical choice as the County Court’s appointment to fill behind long-time assessor Tom Green, who retired at the end of last year.
A native of Bend, Huber found himself in the Bay Area of California, where the Navy took him after graduation from high school. He began to train as a private fee appraiser after discharge, and stayed another 10 years honing his craft.
California’s traffic finally took its toll.
“In miles it was only about 30 or 35,” he said of his daily commute – one way – “but in time, depending on the time of day, an hour and a half or better. It’s not worth it. There’s nothing down there that was that great to put up with that.”
A job in the Crook County Assessor’s office opened up in 1999, and Huber saw a way out.
“Originally I planned to get a job here, and then move to Deschutes County and work in Bend,” he admitted, “but once I got here, and started working with the people here, I didn’t want to leave. I liked it.”
Huber started work in February of that year and by 2002 was promoted to chief appraiser. Now in the county assessor’s shoes, he enjoys dealing with the public on a different level, and working with the other department heads in county government.
“I worked with Tom last year, establishing the budget. I kind of liked that,” he said. “Tom was very good at showing me how to spend wisely the taxpayer’s money. He was very fiscally responsible. He passed that on to me and I appreciated that.”
He also appreciates his three-minute commute.